The Private Equity (”PE”) industry has an infamous reputation for financial engineering and aggressive cost-cutting in the mainstream media. This perception is becoming increasingly outdated with the rise of growth-oriented strategies in private markets – particularly with Growth Equity firms.
“Growth Equity” firms – who provide (a) primary capital to fund organic and acquisition-driven growth and (b) secondary capital giving liquidity to founders – mark a structural evolution within private markets. It bridges the gap between venture capital and traditional private equity buyouts, facilitating a de-risking event for founders whilst allowing meaningful continued ownership in the business.
A new generation of firms is emerging with a core growth equity strategy, while established sponsors are raising funds specifically to bridge the gap between venture and buyout capital.
In practical terms, the profile of PE has evolved from financier to strategic value-added operator.
Growth equity investors deliver targeted operational improvements and strengthen execution. They help turn proven businesses into platforms for sustained, scalable growth. Focused on enabling organic and inorganic expansion, growth equity investors support management teams in delivering operational and commercial expansion. From an organic perspective, sponsors drive growth by investing in digital infrastructure, accelerating product development, and sharpening sales and marketing capabilities. On the inorganic side, they execute targeted bolt-on acquisitions that expand geographic reach, enable vertical integration, and create cross-selling opportunities across complementary markets.
Leading private equity firms deploy dedicated operating partners – frequently former C-suite executives and industry veterans – to challenge assumptions, professionalise operations, and accelerate value creation.
Beyond governance, these operating partners work alongside management to implement data-driven insight across core business areas. Typical levers include procurement optimisation, pricing analytics, and working capital discipline to enhance margins; technology enablement through ERP integration, automation, and AI-driven back-office support; and commercial excellence programmes that strengthen sales effectiveness and customer retention.
Importantly, the focus has shifted from short-term cost reduction to sustainable performance improvement. Embedding continuous improvement cultures and scalable operating models is now the principal driver of returns.
A disciplined approach to inorganic growth remains a defining differentiator. Sponsors excel at identifying fragmented niches and executing programmatic acquisitions to create scaled, defensible platforms.
Typical elements of this model include:
This model has been particularly effective across fragmented markets and with those positioned for international expansion.
From the perspective of growth equity investors, these transactions are designed to be partnerships, not takeovers. Sponsors seek businesses with proven models and clear growth opportunities, but most importantly, those with a strong management team that can execute with additional resources available.
Incentives are more closely aligned, with the existing management team retaining a significant equity position.
These deals work precisely because they accelerate what’s already working. Their value-add lies in institutionalising growth – introducing systems, talent, and governance that allow the business to perform at a higher level without diluting its entrepreneurial DNA.
In essence, growth equity partnerships thrive when both parties remain focused on the same outcome: building a stronger, more resilient, and ultimately more valuable business.
For founders and management teams, the implication is clear: engaging with PE is no longer about relinquishing control. It’s about implementing the systems and processes that allow the business to reach its full potential. Transactions are not merely liquidity events; rather, they are partnerships for growth.
